Multinational financial services company UBS continues to be high on the steakhouse chain Texas Roadhouse. In a note sent to clients on Friday, UBS analyst Dennis Geiger reaffirmed its “BUY” rating on Texas Roadhouse stock (TXRH) while also predicting continued margin gains and earnings growth for the legendary chain.
According to Geiger, the “sales leverage and labor efficiencies” of Texas Roadhouse will be enough to push it towards a successful second half of 2024 despite ongoing beef inflation and other challenging elements. He also believes that the chain’s “competitive advantages will enable a multiyear sales outperformance.”
Geiger kept its price target on TXRH at $185 per share.
“While we expect margins to be more pressured in (the second half) than in the first half of the year, we anticipate expansion driven by favorable other operating expense and traffic leverage over labor,” Geiger writes.
Texas Roadhouse saw its stock jump by 2.42% on Friday to close at $170.68 per share, marking a 43.08% jump year-to-date. The company’s shares went on a further climb after hours of trading, inching up by another 0.57%.
Texas Roadhouse managed to beat expectations in each of the past two quarters, with an earnings report in March revealing a 12.51% increase in revenue and a 31.05% jump in net income. The company will share Q2 financial results on July 27.